The new Unfair Contract Terms (?UCTs?) regime, effective from 10 November, higher maximum penalties will applicable to contracts containing UCTs.

Key takeaways:

• What are UCTs? These are clauses that create a significant imbalance in bargaining power. They do not reasonably protect the interests of the party who would be advantaged by the term and would cause detriment to the party that relied on the term.

• What are some examples of UCTs? Notable examples of UCT are

  • Automatic renewal (terms allowing business to automatically renew contracts).

  • Disproportionate termination (terms enabling termination in a much wider range of circumstances without notice).

  • Limitation of liability and indemnity terms (terms that either limit the business’ liability or requires the customer to indemnify).

  • Termination fees (terms requiring consumer to pay exit fees).

  • Payment before delivery (terms requiring customers to pay the price for the good or service before delivery).

• What is the new UCT regime trying to achieve? The new regime aims to protect small businesses (of less than 100 employees OR with a turnover for less than $10 million) and extends its scope to capture various types of contracts (such as contracts with sub-contractors, retail leases and terms of trade).

• What are the consequences of the new UCT Regime? The new regime introduces significant financial penalties. An individual may face fines up to 2.5 million and companies could be subject to penalties greater of: $50 million OR 3 times value of the benefit obtained by breach OR 30% of the company’s adjusted turnover during the breach period.

What you should do before 10 November 2023

At Gavin Parsons and Associates, we advise our clients to carefully review relevant contracts. It is crucial to ensure that contract terms are transparent and clear, that all rights of parties’ are balanced, that contractual terms aligns with industry standards and codes and that contractual arrangements and risks are thoroughly explained to customers during the sale process.

As always, please feel free to share this reminder with your colleagues, friends and clients as we know everyone will appreciate this useful reminder. If you require further information and assistance in understanding the UCTs, please contact Gavin Parsons or the team at Gavin Parsons and Associates on (02) 9262 4471 or at gavin@gpalaw.com.au

The new Unfair Contract Terms ('UCTs') regime, effective from 10 November, higher maximum penalties will applicable to contracts containing UCTs. 

Key takeaways:

• What are UCTs? These are clauses that create a significant imbalance in bargaining power. They do not reasonably protect the interests of the party who would be advantaged by the term and would cause detriment to the party that relied on the term.

• What are some examples of UCTs? Notable examples of UCT are

  • Automatic renewal (terms allowing business to automatically renew contracts).

  • Disproportionate termination (terms enabling termination in a much wider range of circumstances without notice).

  • Limitation of liability and indemnity terms (terms that either limit the business' liability or requires the customer to indemnify).

  • Termination fees (terms requiring consumer to pay exit fees).

  • Payment before delivery (terms requiring customers to pay the price for the good or service before delivery).

• What is the new UCT regime trying to achieve? The new regime aims to protect small businesses (of less than 100 employees OR with a turnover for less than $10 million) and extends its scope to capture various types of contracts (such as contracts with sub-contractors, retail leases and terms of trade).

• What are the consequences of the new UCT Regime? The new regime introduces significant financial penalties. An individual may face fines up to 2.5 million and companies could be subject to penalties greater of: $50 million OR 3 times value of the benefit obtained by breach OR 30% of the company's adjusted turnover during the breach period.

What you should do before 10 November 2023

At Gavin Parsons and Associates, we advise our clients to carefully review relevant contracts. It is crucial to ensure that contract terms are transparent and clear, that all rights of parties' are balanced, that contractual terms aligns with industry standards and codes and that contractual arrangements and risks are thoroughly explained to customers during the sale process.

If you need legal advice in relation to UCTs, or you are unsure about anything to do with the changes, please contact Gavin Parsons of Gavin Parsons and associates on 02 9262 4471 or gavin@gpalaw.com.au

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Are you a director of a company or anticipate becoming one? If so, due to legislative reforms, you are now required to register for a Director Identification Number (Director ID). A Director ID is a one-off 15-digit unique identifier as an additional security measure against fraudulent breaches of director identification. Additionally, the Director ID serves as a beneficial tool in keeping track of the relationships between directors and corporate entities.

The Deadline

The deadline for the application depends on when you were appointed as a director:

1. If your appointment was before 1 November 2021, you must apply by 30 November 2022;

2. If your appointment was between 1 November 2021 and 4 April 2022, you must apply within 28 days of your appointment; and

3. From 5 April 2022, anticipated directors must apply before their appointment.

Given the upcoming deadline please keep in mind that the team at GPA Law are experienced in applying for the Director ID and are happy to provide further information and assistance in understanding and navigating the Director ID application process.

Further, for additional information on this topic, please click on the below links to two of our other previous articles discussing the introduction and implications of Directors IDs.

Penalties

It is a criminal offence if the application is performed outside of the prescribed time period. Failing to have a Director ID incurs a $13,200 penalty. For more information on penalties, please visit: https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/director-identification-number/#faq3.

The Identification Reasoning

If your company is in Australia, the Director ID will start with 036. In the event that you are a director of multiple companies, you only have to apply for one Director ID. Once applied for, the allocated Director ID will be one that you have forever, regardless of the following:

1. If you change companies;

2. Terminate being a director;

3. Process a change of name; or

4. Change your residency status to an interstate or international residence.

The Application Process

Time to apply: 20-30 minutes (subject to the availability of identity documents).

Below is a step-by-step process to assist you and any of your company director clients. Please copy and paste the links into your browser bar.

Step 1 | Set up your MyGovID

The application is performed via the Australian Business Registry Service at https://www.abrs.gov.au/director-identification-number/apply-director-identification-number.

If you have not already set up your MyGovID profile, this will be your first step.

Note: It is recommended that you download the MyGovID app from the app store or Google Play on your mobile/smart telephone and follow the prompts ensuring that your identification strength is strong. For your identification strength to be strong we recommend that you use your passport. Below is a list of Australian Identity Documents you can choose from in order to identify yourself:

• Passport ? no more than 3 years expired;

• Driver’s licence (including learner’s permit);

• Birth certificate;

• Visa (using your foreign passport);

• Citizenship Certificate; or

• Medicare card ? (once you verify one of the documents above in the app, you’ll have the option to verify your Medicare card).

Step 2 | Verification of Identity

If you have previously verified your identity on the MyGovID website, you can skip this step and go directly to Step 3 below. Otherwise, you will need the following to complete the verification process via MyGovID.

If you do not have these Australian Identity Documents then you will need the following:

1. Your individual tax file number (Note: this is not compulsory, however, it will speed up the application process); and

2. Your residential address as recorded by the Australian Taxation Office (ATO); and

3. Any two of the following: 

• A bank account statement

• An ATO notice of assessment

• A superannuation statement

• A dividend statement

• A Centrelink payment summary

• A PAYG payment summary

Step 3 | Complete Your Application

Apply online now ? Complete your Application.

When you are ready to complete your application make sure your mobile/smart telephone which has the MyGovID app on it is on the same WIFI as your computer. This will allow your computer to provide you with a 4 digit code so that you can proceed with the application.

1. On your computer, enter your MyGovID email and click login;

2. On your mobile/smart telephone enter the MyGovID 4 digit code;

3. On your computer agree to sharing your Digital Identification with the ATO; and

4. On your computer provide your address and TFN as held by the ATO. Your ATO record should then be found.

Your Application for your Director ID can then commence. This final stage is done completely on your computer.

1. Confirm you are an eligible officer or intend to become an eligible officer within 12 months of your application;

2. Acknowledge that you understand that to be a director you must meet the requirements of the Corporations Act 2001 and /or the Corporations (Aboriginal and Torres Strait Islander) Act 2006;

3. Confirm your full name, date and place of birth, your current residential address and contact details;

4. Review and submit your application providing a declaration that all the information you have provided is true and correct; and

5. You will then automatically be provided with your Director ID on screen. You can print and save this in PDF format.

Alternative Telephone or Paper Application

In the alternative, a paper application or telephone application is also available. Details for this are set out as follows:

If you currently live in Australia and can’t apply online, telephone the Australian Business Registry Service to apply for a Director ID.

To apply by telephone, you’ll be asked to verify your identity. You’ll need:

? Your tax file number (TFN) ? optional but it will help speed up the process

? Your residential address as held by the ATO

? A primary and secondary Australian identity document

? Information from 2 other documents to answer any questions the Australian Business Registry Service has for you. This may include:

• Bank account details

• Notices of assessment

• Super account details

• Dividend statements

• Centrelink payment summaries

• PAYG payment summaries

If you currently live outside Australia and can’t apply online, you can apply using a paper application form: https://www.abrs.gov.au/sites/default/files/2022-07/Application_for_a_director_identification_number_for_those_living_outside_Australia.pdf

In addition to completing this application form, you must also provide certified copies of your documents that verify your identity. Your Director ID will be sent to the postal address on your application. It may take up to 56 business days for your application to be processed.

How Gavin Parsons and Associates can help?

If you are a CATSI director (a director under the Corporations (Aboriginal and Torres Strait Islander) Act 2006, different provisions may apply to you. If you are, kindly contact our office for more information and further guidance.

As aforementioned, the team at GPA Law are experienced in applying for the Director ID and are happy to provide further information and assistance in understanding the application process, and how it affects you, your business or clients. To obtain this information or our assistance, please contact Gavin Parsons of Gavin Parsons and Associates on (02) 9262 4471 or at gavin@gpalaw.com.au.